An exploration of branding in industrial markets

NORTH- HOLLAND

An Exploration of Branding in Industrial Markets Susan McDowell Mudambi Peter Doyle Veronica Wong Is branding important in industrial markets? To answer this question, the authors synthesize previous research in branding and related areas to develop a new conceptual model of industrial brand value to the customer. Expected brand value consists of four components: product performance, distribution (ordering and delivery) performance, support services performance, and company performance, with each component integrating both tangible and intangible elements. This model is then compared to the views elicited from in-depth interviews with manufacturers, distributors, and purchasers of precision bearings. This exploratory study of the decision-making process and the sources of industrial brand value highlights the importance of relatively intangible product and company attributes. The findings indicate that branding may play a powAddress correspondence to Susan Mudambi, Open University Business School, Walton Hall, Milton Keynes MK7 6AA, UK. E-mail: [email protected]

erful role, especially in industrial markets where it is increasingly difficult to maintain meaningful differentiation on the basis of product quality or price. © 1997 Elsevier Science Inc.

INTRODUCTION A number of products in industrial markets have nearly identical physical specifications and performance, yet one of the products successfully maintains a high market share, even at a premium price. The question arises as to what differentiates the successful product from its competitors in the eyes of the customer. The basic explanation lies with customer perception of superior value [1]. However, the processes involved in adding value are complex and interrelated [2]. Many explanations and prescriptions for meaningful product differentiation and sustainable competitive advantage abound in

Industrial Marketing Management 26, 433-446 (1997) © 1997 Elsevier Science Inc. All rights reserved. 655 Avenue of the Americas, New York, NY 10010

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C u s t o m e r s p e r c e i v e the a d d e d v a l u e s of a s u c c e s s f u l brand. the literature [3]. According to Aaker ([4, p. ix]), when the industrial purchase decision is a "toss-up," the "decisive factor then can turn upon what a brand means to a buyer." However, discussions of industrial markets only occasionally refer to branding or brand equity [5]. More common explanations for purchase decisions emerge from the literatures of organizational buying behavior, buyer-seller relationships, and industrial segmentation. This article places industrial branding into this broader context. This article first introduces brands and branding, then briefly reviews the few studies explicitly on industrial branding. Next, the article discusses how research in other areas of marketing and management relate to industrial branding. The paper introduces and describes a conceptual model of industrial brand value to the customer. This model is compared to the views emerging from field interviews with technical, marketing, sales, and purchasing personnel involved in industrial product markets. The final section draws out the managerial implications of the research.

BRANDS AND BRANDING To some industrial marketers, the word brand connotates a gimmicky tactic for a less serious consumer product. To others, brands are simply products with brand names or logos. These perspectives gloss over key differences in the degree or level of branding. Brands are commonly depicted in the literature as a multiple level pyramid, with basic physical attributes forming the base, upon which rests

SUSAN MCDOWELL MUDAMBI is Lecturer in Marketing, Open University Business School and a doctoral student in marketing at the Warwick Business School, University of Warwick, UK. PETER DOYLE is Professor of Marketing and Strategic Management, Warwick Business School, University of Warwick, UK. VERONICA WONG is Senior Lecturer in Marketing, Warwick Business School, University of Warwick, UK.

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the tangible benefits, the emotional benefits, the brand personality characteristics, and with the soul or core of the brand at the top of the pyramid. Alternatively, successful brands can be viewed as a quality product surrounded by several layers of product features of increasing intangibility [1, 6]. A basic brand is a quality product that has been differentiated from its competitors through marketing mix decisions. An augmented brand offers buyers additional tangible benefits such as support services and guarantees. A potential brand is perceived by buyers to have real, if intangible, values that differentiate the product in a sustainable way from competing products. A successful brand combines an effective product, distinctive identity, and added values, as perceived by customers [ 1]. Brand equity is defined as the total value added by the brand to the core product [7]. Aaker [4] identifies five categories of assets underlying brand equity: brand loyalty, name awareness, perceived quality, brand associations, and other proprietary brand assets such as patents and channel relationships. Brands add to customer value by giving signals about the offer [8]. These signals are often interpreted in terms of risk reduction and enhanced satisfaction. Discussions of branding imply the existence of an underlying process suggested by random utility theory. Customers form preferences based on their perception of attributes; these preferences are translated into choice decisions, with customers choosing the product with the highest expected value or utility. In turn, choice decisions are directly linked to actual behavior [9]. Figure 1 provides a simple way of depicting the branding system, with the degree of branding affecting buyer perception and attitudes, buyer behavior and brand financial performance, and thereby affecting branding strategy. In reality, the relationships and the process are more complex, because, for example, buyer behavior also affects perception and attitudes.

LITERATURE REVIEWS Although little research has been conducted explicitly on industrial branding, several other research areas offer

BUYER DEGREE OF H PERCEPTION H BUYER H BRAND H BRAND BEHAVIOR PERFORMANCE STRATEGY BRANDING &ATTITUDE \

basic augmented potential

benefits values

choice loyalty

brandequity profits

newservices promotion

FIGURE1. The branding system. findings and techniques of much greater depth and breadth. In particular, industrial branding can draw from and synthesize research on consumer branding, organizational buying behavior, buyer-supplier relationships, and industrial segmentation. A comprehensive review of the literature of these areas lies well beyond the scope of this article. Instead, the following subsections examine several studies in each area, highlighting the relevance of the models or methodologies.

Industrial Branding Literature The terminology of branding can be problematic, and deciding what constitutes an industrial product can also be difficult. Defining industrial products as products sold to businesses implies that Bic TM pens and Windows 95 TM are industrial brands. Because they are clearly consumer brands as well, this picture is muddled. Industrial products are defined here as products used in manufacturing that are not marketed to the general consuming public. Industrial products can be process inputs, defined as products consumed in the manufacturing process (such as industrial filters and abrasives); or product inputs, products remaining as ingredients of the final product (such as bearings and coatings). Both goods and services are covered by the definition, as are capital goods and consumable items. Relatively few attempts have been made to analyze or explain branding in industrial markets. A Business Marketing [10] editorial noted with dismay that a Young and Rubicam model that charts brand strength and value for 6000 brands in 19 countries, virtually ignores brands in the industrial marketplace. Others [11] described the industrial branding literature as "sparse and unfocused." Few articles or texts discuss industrial products and branding in the same sentence, much less quantify the benefits from the seller or buyer perspective. A few exceptions are summarized below.

Saunders and Watt [12] analyzed the use of brand names for man-made fibers, described as essentially identical industrial products. They criticized the brand names as being somewhat confusing and ineffective. However, they examined how housewives perceived the brands, rather than how weavers and other industrial buyers perceived them. Sinclair and Seward [13] examined the branding of reconstituted structural wood panels. They concluded that producers generally perceived their brand strategies to be more effective than they were. Despite widespread branding, retailers identified price and availability as the two most important purchase factors. The few producers with effective branding were those with the products of the highest perceived product quality. Shipley and Howard [14] found that UK industrial companies use brand names widely, and perceive them to be important. However, the study provided no evidence of the effectiveness of the branding efforts. Firth [15] analyzed the pricing of accounting services in New Zealand, before and after the law was changed to permit the use of the names of the big-name accounting firms. He found a rise of about 4% in prices attributable to the name change. Gordon et al. [16] surveyed US electrical contractors concerning purchases of circuit-breakers, and concluded that brand equity is "alive and well" in the sector. However, their empirical results showed that loyalty to distributors is as important as brand loyalty. They also determined that brand loyalty is synonymous with firm loyalty, at least in this product subcategory.

Consumer Branding Literature Consumer branding provides a logical starting point for examining additional ways to analyze industrial branding. The richness, sophistication, and practicality of consumer branding research offers great challenges and opportunities for industrial branding researchers [17]. Considerable research has been undertaken to explain

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Research in many areas provides insights into the role of industrial branding. and predict consumer brand preference [18, 19], as well as the dynamics of consumer brand switching, with efforts made to distinguish between attitudinal and behavioral components of loyalty [20]. Many of the studies employ relatively sophisticated Markov or semi-Markov approaches to predict brand choice [21]. Ehrenberg [22] argues that changes in market share can override the underlying switch probabilities, and that relative market share is the simplest and best predictor of brand choice. Other factors enter into the industrial situation, because switching brands often implies switching suppliers as well. Interesting comparisons can be made of the research on consumer brand switching and the extensive body of research into buyer-supplier relations [23]. Another relevant linkage is between brand switching models and segmentation analysis [24]. A number of models to explain or predict brand preference decompose consumer attitudes into multiple attributes. Modeling brand choice strictly as a function of price and the ratings of basic product attributes fails in many cases to explain differences in market share. A number of studies have attempted to explictly identify and measure both tangible and intangible product attributes [25, 26].

Organizational Buying Behavior Literature Research into the organizational buying process covers many aspects, and employs a wide range of techniques. One very important area of inquiry is the decision making unit (DMU) or buying center [27]. The size and composition of the DMU vary according to product and organizational characteristics. Research has demonstrated how members of the DMU often have different perspectives on the importance of various product attributes such as price and technical sophistication. For example, Wolter et al. [28] found significant differences in how buyers and designers evaluated emotive or nonfunctional product attributes, and called for greater rec-

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ognition of the importance of emotive aspects of product evaluation. Another key issue is the distinction between straight rebuy, modified rebuy, and new task situations [29], distinctions which reflect the extent of problem solving behavior involved. The nature and types of buying decisions change over time. Past research appears to indicate that branding may be more important the more complex the buying decision. Another large area of research analyzes the factors influencing industrial buying decisions. These can be categorized as environmental, organizational, interpersonal, and individual [27]. The organizational buying literature has identified and measured non-product characteristics and intangible elements of the buying decision in a number of ways. Using an experimental design, Levitt [30] found that the company's overall reputation is generally more influential than the sales presentation, but that the presentation effect is more powerful the greater the riskiness of the decision. However, technical personnel under high-risk situations relied more heavily on company reputation than on the presentation. Levitt's [30] research opened the door for more analyses of intangible aspects of industrial marketing, and of differences within the buying center. Attribute measurement is an important aspect of the research. Lehmann and O'Shaughnessy [31] used discriminant analysis to examine, across product types, how US and UK purchasing agents rated attributes in choosing a supplier. The 17 attributes included basic brand factors such as technical specifications, tangible examples of brand augmentation such as training, and more intangible factors such as overall supplier reputation. Reputation lies at the heart of branding strategy, so their finding that supplier reputation is one of the most highly rated attributes is of special interest. Supplier reputation was found to be more important to US purchasing agents than to those in the UK. Other research [32] implies that branding is more important for generic products, those perceived by buyers to have little difference in product characteristics, although not necessarily in other key buy-

Branding is more important in s o m e s e g m e n t s than others.

ing factors. The importance of particular attributes and the decision-making process has been found to vary between the consideration stage and the choice stage [33, 34]. One implication of this is that branding effects, too, can be expected to vary between decision-making stages, although this hypothesis has not been systematically tested in industrial markets. Shaw et al. [35] found that most buyers are more concerned with psychological or intangible attributes of the vendor than with physical attributes of the product, and concluded that promotional activities should reflect this concern. Similarly, a study of buyers across a range of products [36] revealed a relative lack of sensitivity to physical product attributes, and a relatively high sensitivity to seller image and other intangible product attributes. And Smith and Andrews [37] noted the importance of customer perception of the company' s "domain of expertise."

Buyer-Supplier Relations Literature Research in this area incorporates a wide range of issues, including partnerships, networking, strategic alliances, relationship marketing, and transaction cost economics, all of which recognize that current buyer-supplier relations defy simple explanation [38]. Deming [39] advocated "long-term relationships of loyalty and trust," and some evidence indicates that Western companies are moving away from their traditional adversarial relationships with multiple suppliers. Research on industrial relationships [23] can be viewed in a broader context of relationship marketing [40]. Whatever the terminology, companies appear to be placing increasing importance on a wide range of relationships. Many top companies are switching from selling products to finding broader approaches to reducing the cost structures of their suppliers and customers.

Industrial Segmentation Literature Customers in industrial markets can be segmented in many different ways, as others have discussed in detail

[41, 42]. Few segmentation analyses explicitly address branding, but they do highlight branding issues, as the following studies illustrate. Doyle and Saunders [43] demonstrated how segmentation by product application or end use can assist a company in developing its positioning strategy as it moves from basic commodities to specialty products. In addition to several general measures of market attractiveness, the model variables include six product specific features, which can be seen as elements of basic brands, and four company characteristics, which indicate the degree of brand augmentation and potential. The incorporation of branding can help in evaluating the attractiveness of the alternate segments, and in making decisions on positioning and the marketing mix. Segments with a high degree of branding pose higher barriers to entry, and demand different marketing skills than do segments with low levels of branding present. Depending on the situational dynamics, companies can consider a range of strategies, from large investments in branding to debranding [44]. Segmentation on the basis of benefits [45] can be strengthened by the branding framework. The benefits sought include elements of basic brands, namely product attributes and performance characteristics, and greater degrees of branding, such as parts availability and support services. Similarly, others [46] distinguish between segments defined by technical parameters and those defined by buying factors. An understanding of the degree of branding can help the company become more responsive to customer expectations as the product market matures and competitive pressure increases. Within the steel industry, for example, research has identified three distinct segments, a price-sensitive segment, a service segment, and a commitment segment [47]. These cut across traditional segments of type of product and type of consuming industry. This knowledge can help to explain the existence of a difference in profitability between similar shipments of up to 20% in some commodity markets [48].

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Drawing from two in-depth segmentation studies [42, 49], Table 1 illustrates how branding can be considered in the context of industrial market segments. In this example, customers are segmented by price sensitivity, or willingness to pay high prices. A basic brand may involve relatively low costs, but customers rarely pay high prices for a basic brand. Augmenting a basic brand increases the costs of the offer, sometimes quite significantly, yet does not guarantee high prices. Some customers do not need higher levels of service or quality, and are thus unwilling to pay more. Other customers will initially pay a premium price for the recognizable services and guarantees of an augmented brand, but only up until these services become widely copied and available. More difficult to generate, and to copy, are the real, but intangible benefits or values of a potential brand. These intangible benefits can be costly to develop and maintain, but provide the key to sustainable differentiation, and to the maintenance of premium prices.

CONCEPTUAL FRAMEWORK These and other findings on the importance of tangible and intangible attributes make a strong case for understanding more about branding. The literature review provides a small taste of a word soup of terminology used to explain how customers choose between similar competing products. Simply stated, intangible factors matter, even in rational and systematic decision making. The difficulty lies in organizing the interrelated, overlapping aspects to explain this phenomenon. To understand successful brands, each attribute must be analyzed from the perspective of expected value to the customer. Brand value to the customer is a function of the expected price, and the expected performance of tangible and intangible attributes. Figure 2 presents these conceptual underpinnings in a pinwheel of brand value to the customer. In operation, a pinwheel's individual vanes revolve and blur together. Examining a pinwheel at rest

TABLE 1 Branding in the context of buying segments Costs Brand Basic Augmented Potential

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Low

Price High

X X X

Low X X

High Rarely X X

may give a false impression of its purpose, but is necessary to understand how it works. Similarly, it is difficult, but important, to stop and systematically analyze the composition of brand value. Brand value to the customer is comprised of four performance components: product, distribution (ordering and delivery) services, support services, and company. Each performance component involves both tangible aspects, the dark vanes, and intangible aspects, the light vanes. The idea of tangible and intangible attributes is well established in the buyer behavior literature, as previously reviewed. Although tangibility can be thought of as existing as a continuum, at the extremes, the differences in the terms are clear. Tangible aspects of the offer are physically present or can be seen, experienced, or measured in some way. Intangible aspects of the offer are more "elusive or visionary" (Oxford Reference Dictionary), are understood using cognitive processes, and also often contain an emotional dimension. Generally, these concepts have been applied by identifying some attributes important to the choice decision, such as physical quality as tangible, while identifying other attributes, such as reputation, as intangible. The pinwheel of brand value takes this concept one step further. The pinwheel recognizes that, because evaluations of physical quality also involve measuring quality that is at times quite elusive or difficult to define (the "art" of engineering), then even this very tangible performance component contains an intangible aspect. Similarly, because the intangibility of performance components, such as reputation, generates risk and uncertainty, buyers seek out tangible measures of reputation. As shown in Figure 2, tangible performance aspects may have limited connection with each other. The intangible aspects of performance strengthen the connections and help the brand to provide meaningful value to the customer. Four performance components comprise brand value to the customer: product, distribution (ordering and delivery) services, support services, and company. The four performance components require further explanation. Product performance lies at the value base, centering on the core physical product. Tangible product performance is quantifiable by measures such as number of defects and usable product life. Issues of quality control management have been thoroughly explored in the literature, yet performance measures also involve intangible elements and subjectivity. Two products may have identical failure rate histories, but a production manager may rate one as more reliable or of higher quality than the other

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FIGURE2. Performance components of the pinwheel of brand value to the customer, with examples.

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because of prior experience or due to other influences. Garvin [50] explored the issue of perceived quality, recognizing that decision makers often have incomplete or conflicting information. Distribution performance encompasses aspects of ordering, availability and delivery. Distribution is clearly central to the performance of industrial distributors, yet distributors also have to provide a quality product, support services, and be a stable company. Industrial manufacturers are also evaluated on their distribution performance, both by distributors and by end users. Tangible measures such as required lead times and the number of late deliveries are routinely quantified, and the presence of online ordering systems is also tangible. Delivery performance has often been cited as a critical factor in the literature. More intangible elements such as the ease of ordering, general reliability, and the willingness and ability to respond in an emergency also add value. Support services performance includes the provision of services that augment the basic product. These include technical support, training, and financial support services, either as part of the standard offer, or at an additional

charge. A tangible checklist can identify which services are offered, the times and number of staff available, and coverage of financial guarantees. For example, suppliers are increasingly expected to provide technical support at the research or design stage, during installation, and in the operating environment. More intangible are notions of service quality and the degree of rapport and understanding between the service providers and the customer. Suppliers routinely try to measure customer satisfaction with the service support, as distinct from satisfaction with the product itself. Distributors and manufacturers are both offering an increasingly wide range of support services. Company performance encompasses aspects of the company as a whole, rather than any particular company product, brand, or service, and is an appropriate consideration both for manufacturers and for distributors. The underlying assumption is that industrial purchasers prefer to conduct business with companies that are relatively stable, successful, reliable, and culturally compatible. Tangible evaluations of a company include measures of financial stability, such as reported profitability and market share. Smith and Andrews [37] noted that the perceived amount 439

The pinwheel of brand value represents a dynamic customer view of expected value. of advertising investment behind a product can also serve as a product and company quality cue. Many intangible elements are of considerable value, including company reputation, quality image, and country of origin. Gross [51 ] described this aspect as the "relationship value," and included in it factors such as technical potential, reliability, pleasantness, and trustworthiness. The processes and importance of building relationships on the basis of shared expertise, and the development of strategic partnerships are areas of considerable research, both from the perspectives of the purchaser and of the supplier [52, 53]. The pinwheel of brand value to the customer complements the basic, augmented, potential model of branding. For basic brands, the product performance vane is the most prominent, with the vanes of support services, distribution, and company performance remaining relatively indistinct. For augmented brands, distribution and support services performance gain prominence. Potential brands can be described with a well-balanced pinwheel featuring all the performance components. The pinwheel of brand value also provides an important contrast to conventional depictions of brands as distinct layers of increasing intangibility. The layered depiction of brands may understate the role intangibility and subjectivity play at even the physical product core. The pinwheel of brand value acknowledges, for example, that customer evaluation of a core product attribute, such as the technology utilized, involves intangible and even psychological aspects. The diagram recognizes the synergy between tangible and intangible factors and the overall dynamism of the decision environment.

METHODOLOGY This study is part of a larger project examining decision making and sources of customer value across a range of industries. Approximately 15 in-depth interviews with manufacturers, distributors, and purchasers of industrial consumable products explored in what ways practitioner views match or contrast with conventional descriptions of the

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decision-making process. The interviews sought to probe the sources of industrial brand value to the customer.

Sample The UK precision bearings market met the overall study's selection criteria: a well established sector; products generally regarded as of consistently high quality [54]; internationally recognized physical product standards; customer access to multiple suppliers; high involvement by multinational suppliers; and the purchases or products perceived to be relatively complex, with some elements of risk involved. The interviews focused primarily on decision making concerning precision bearings, especially standard or catalog bearings. The sample for the exploratory interviews was selected on a judgment basis, and reflects the intention to avoid known biases and to make the study representative of the sector' s manufacturers, distributors and customers. The primary objective was to solicit insights into the decision-making processes, steps or stages, and influences, as viewed by managers at different parts of the bearings supply chain. Secondary information sources were tapped to identify the top ten manufacturers of bearings in the UK, all of which are large, multinational companies. Two of the largest companies were selected. Two other manufacturers were chosen, primarily on the basis of geographic convenience to the researcher. All of these companies agreed to cooperate, and interviews with marketing managers and engineering or technical managers were conducted, supplemented in some cases with a mailed questionnaire. Similarly, a list of bearings distributors was compiled, with the two largest distributors and one smaller distributor chosen and interviewed. Three key bearing customer segments were identified, namely, automotive, household appliances, and heavy machinery. Leading companies in each of these sectors which purchased large quantities of bearings, and which were relatively geographically convenient were chosen. Again,

Decision making involves evaluations of tangible and intangible elements. purchasing personnel at each company selected agreed to cooperate. The sample included respondents involved in purchases for new designs and existing designs; for original product and replacement or service needs; for utilization in final products; and for production processes.

Interview Process and Analysis Initial contact with the respondents to ask for cooperation was generally made via telephone. Where telephone contact proved difficult, a brief letter describing the project was sent, and subsequently followed up. In most cases, a copy of the types of questions to be asked in the interviews was mailed or faxed to the the respondent prior to the interview. Most of the interviews were conducted face-to-face at the respondents' place of work. A few were conducted by telephone. The average interview lasted between 60 and 90 minutes. All of the interviews were conducted by one of the authors, following a semistructured interview format. Similar to the methodology used by Kohli and Jaworski [55] and others, the conceptual framework was not shared in any way with the interviewees, nor was the word "branding" used in any of the questions. Open ended and closed ended questions were used. Interviewees were also asked to draw a map or diagram to depict the process, including any important steps or stages, and to draw the various influences on the process. A series of probing questions were asked about the criteria customers used in deciding between competing product offers. Interviewees then reviewed a preliminary list of choice criteria, and modified the list to more accurately reflect their preferred wording, etc. They ranked the criteria in terms of importance, and applied scaled and percentage weights to the rankings. Various techniques were used to analyze the interviews. Responses to the open ended questions on the decision process were examined to identify patterns in word usage, and to see if and how words such as brand, quality, relationship, and risk were used. Efforts were made to capture the language of the practioners. Closed

ended and scaled questions were summarized using descriptive statistics, but were not further analyzed due to the small sample, and the apparent differences in interpretation of the questions and terms by some respondents. Diagrams and pictoral representations by the respondents were not formally analyzed, but provided insights to the researchers on the processes involved.

FINDINGS Decision Process Characterization of the decision process generally underscored the importance of technical product evaluation, with the product and decision generally perceived to be of moderate to high complexity. Customers without extensive in-house technical expertise tended to seek out distributors or manufacturers who were generous with technical advice. More sophisticated customers also viewed technical input from the manufacturers as an important part of the process. These relationships were cited in response to a general question about the nature of the decision. Interviewees were asked to explain whether the decision-making process on this particular industrial product was primarily a decision on supplier, or a decision on product. Practical guides to purchasing [56, 57] often characterize the industrial purchasing process as one of supplier sourcing, while consumer decision making is primarily presented as one of product evaluation. Responses varied, but more senior managers were more likely to emphasize supplier selection, while junior managers emphasized product selection. When asked to draw a map or diagram of the process, the resulting drawings were relatively similar across companies and applications. Supplier and product screening were depicted as occurring simultaneously or in parallel, until the final choice stage, where the decision was usually characterized as one of choice of supplier. The processes did vary in the degree of regimentation or formality of the process, although this was not always obvious from the diagrams themselves.

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The power of industrial brands remains largely unexplained and untapped. Influences The issue of risk as an influence on the process was explored. The consequences of product risk in terms of bearing failure ranged widely. In many automotive and heavy machinery applications, bearing failure is a safety issue, as well as a recall or warranty issue. In domestic appliance applications, the risk is that malfunction will result in a product recall, but more importantly in the permanent loss of a customer, with extensive negative wordof-mouth costs. For production processes, risk lies in manufacturing downtime, with its very measurable costs. Supply risk was also a critical factor, because many companies in recent years have suffered from shortages and delayed shipments of bearings. Price risk was also important, as bearings prices significantly vary across the globe, complicating sourcing and production decisions. Throughout the discussions, the interviewees often highlighted areas of the process that involved subjective evaluations and elements. Nearly all mentioned that the final decision sometimes "simply comes down to personal preference." This led to questions seeking to identify the components of personal preference, and their relative influence. Some of the components were admittedly reflective of "non-professional attitudes," such as favoritism, "politics" and the reliance on outdated information. Yet, in general, the interviewees generally characterized personal preference as a key aspect of professional judgment. "No one can know everything," noted one manager.

"It makes sense to want to feel comfortable about working with a company and its representatives."

Criteria and Sources of Value Price was always mentioned early in the conversations, both by the buyers and the sellers. Several suppliers warned that buyers would probably understate the importance of price, and instead emphasize other criteria. However, buyers did generally rate price as the most important criteria, with some buyers estimating that price accounts for 70% of the final decision. Price was less important at the early screening stage, and on several occasions buyers stated that it is "unprofessional" to put t o o much weight on price alone. Price was considered more important in replacement or aftermarkets than to original equipment manufacturers. Pricing terms and conditions were quite standardized, but factored in some decisions. Large buyers often expected suppliers to adopt an "open book" policy in which development costs and expected margins were scrutinized. One purchasing manager admitted that price negotiation is risky. "We have been known to push our first choice too far and cause the supplier to withdraw itself from consideration. Then we have to settle for our second choice supplier at an even worse price." For non-price issues, Table 2 provides an example of how the concepts that came out of the interviews relate to the conceptual model. Product quality was defined using a combination of

TABLE 2 Summary of Customer Perceived Sources of Value Product

Distribution

Tangible Precision Load bearing Dimensions Intangible Innovation Fit for purpose Over-engineered

Tangible Stated availability Stated lead times EDI and J1T Intangible Ease of ordering Reliable delivery Emergency response

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Support Tangible Design advice Product testing Site support Intangible Understands our needs/business Troubleshooting

Company Tangible Financial stability Years of experience Global coverage Intangible World class Technical leadership Global perspective

technical product specifications, underlying design features, reliability, and innovation. Purchasers generally subjected products to a series of technical testing both before and after initial purchases, in accordance with formal quality control procedures. Test results were cited as being of great importance to the decision-making process, but "are placed into a broader context," in the words of one technical manager. Another manager noted, "so many other factors can affect even the best run test, that we don't take the test results literally," as factors such as operator error and environmental conditions could unfairly affect the results. Assessments of product quality involve "a measure of faith," said one manager. Specific design and product features were generally most critical in the early stages of the process, when the final specifications were being formalized by technical personnel. Yet, as one marketing manager noted, "we also need to sell these features to the purchasing agents as a rationale for choosing us, and to justify our [higher] price. Our unique features are a symbol of our quality." Overall, product quality was seen as the foundation for overall product and company reputation. When asked what is the key to a bearings manufacturer reputation, the responses were remarkably similar to the comments of one customer: "The key to reputation is no quality issues of any kind ever." Added another, "For some types of purchases we tolerate a quality slip up now and then, but not with bearings." Distribution services were cited as key decision criteria. Product availability and delivery reliability were highlighted by participants, which is understandable in this market which has been characterized by significant product shortages in recent years. Standard lead times were important, but the ability to respond quickly to emergency requests was seen as more critical. Also, the willingness of the manufacturer to control or limit the buyer' s inventory carrying requirements was a factor. Just-in-time delivery was a plus (especially if it was not accompanied by requirements for "just in time payments," one joked). Purchasers frequently described the kinds of record keeping activities they undertook to track delivery performance, although some admitted that they hoped to improve in this area. "There is sometimes a halo effect," said one. "Sometimes we come to realize that a favored supplier hasn't been as perfect as we thought." Ease of ordering was another factor, with EDI and related facilities commonplace. Differences in the clarity and comprehensiveness of product catalogs were noted. Others cited the day-to-day "ease of ordering" at the in-

terpersonal level, which in some instances came down to efficient telephone answering and competent clerical assistance. Ease of ordering in emergencies was also mentioned, with words such as trust and teamwork used. "I like to know that if I make a mistake and forget to place an order, the supplier will be willing to do me a favor and keep me out of trouble," summed up one purchasing manager, "even though sometimes I feel I end up repaying the favor many times over." Senior managers were said to be more likely to remember the times when the supplier failed to perform, and be less willing to credit past good behavior. A global supply network was important to companies who operated in several international markets, but this depended on their particular sourcing policies. In constrast, some small UK-based companies who rely on bearings distributors do not perceive a strong need for their distributor to have even a national network. A wide range of support services were consistently mentioned. The ability to provide technical support and troubleshooting for products in the field was important on both an on-going and emergency basis. The availability of hotlines, on-call services, and regular site visits were cited. Training of technical staff upon request was also expected and commonly provided. Increasingly, the technical support is expected earlier in the decision process, with suppliers actively participating in design brainstorming sessions. A medium sized manufacturer said its willingness to help with design was a way of "getting a foot in the door" and saw technical support as a strategic asset. "We make it a point to emphasize that our support comes without strings attached, unlike some of our competitors." Although technical support is generally provided free of charge, it often comes with the expectation of a future order. As one supplier said, "We expect to be paid for the advice one way or another." In some instances, if the market leader has a reputation for technical leadership, it "can afford to play hard to get." Said one leading company, "we sometimes let the customer struggle with another manufacturer before offering to step in. We don't want to throw our expertise away and be taken for granted." The technical advice was placed in the context of general rapport and understanding of the customer requirements. Said one manufacturer, "our customers stay with us because we understand the nuances of their business." A buyer said, "we try to get the supplier to feel part of our team." The company itself was described as having various influences on the decision. As stated earlier, after systematic evaluation and negotiation of the price, product, delivery

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and availability, and support services, the differences between competing offers may be quite slight and subtle. The process then becomes one of price negotiation and the choice of company. To some buyers, the decision comes squarely down to price. Others "go out of their way" to choose a particular supplier. A marketing manager of a leading manufacturer explained this as the customers "buying [our] message." The "message" was described as made up of technical experience, a history of innovation, a stable future supply, and worldwide coverage. More intangible associations with a market leader included "less risk" and "no need to explain or justify the choice." Several respondents went so far as to claim that "some buyers feel they gain prestige or status" by buying from a market leader, and that buyers "feel good to be a [market leader] buyer, proud to wear [our] hat." Some disagreement emerged over which type of buyers are more influenced by the "big names" in the industry. To a medium sized manufacturer, "the big names give confidence to smaller replacement buyers, but big companies aren't influenced by that as much." A market leader had a different view: "to the [big] companies it matters. We are a company they can feel comfortable working with. They know they can count on us when something goes wrong." A supplier's large size and market share does appear to inspire confidence in buyers, but can be a negative factor as well. Some thought medium sized companies were "more interested in the concerns of smaller customers," a sentiment not disputed by several market leaders. Several large purchasers of bearings emphasized the importance of buying from a "global" company, with the ability to support their operations in the United States, Europe, and the Far East. "Ideally, our suppliers think globally, and understand why moving to a global design is important to us." Another customer noted that in the early screening phase it was important for the supplier to "look world class, and be able to make our price requirements." The importance of developing a relationship with the company, was often mentioned. The relationships were described in relatively formal terms. Multiple (5 to 7) year contracts were common, with contracts for a particular part number covering the life of the production run, plus a service replacement period. These contracts had multiple "out clauses" for the customer, "but we have never broken one," said one buyer. Even so, the pervasive sentiment seemed to be the "door is open for the next generation [of product]. The current supplier may think it has the edge, but that is not always the case." In

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contrast to the United States, most bearings in the UK are sold directly to users. In the UK, distributors in the UK are becoming increasingly important, but play a much smaller role than in the United States.

MANAGERIAL AND RESEARCH IMPLICATIONS These interviews, summarized in Table 1, can be used to illustrate the conceptual framework, but cannot be said to prove or confirm it, especially given the exploratory nature of the research. The four sources of performance of product, distribution services, support services, and company were repeatedly mentioned in the field interviews, although these were sometimes described in unexpected ways. The interviews helped to clarify the specific performance concerns of each particular market and emphasized the role of the tangible and intangible elements. As one purchasing manager explained, "We are very aware of the subjectivity involved. What we try to do is develop relatively objective measurements for each of the subjective elements." That judgment in many ways captures the spirit of the pinwheel of brand value and drives ongoing efforts to quantitatively measure influences on the decision-making process. In addition to the summary in Table 2, the following suggestions and implications for managers and researchers stem from the literature review and the field interviews. RECOGNIZE THAT INTANGIBLE FACTORS MATTER, EVEN IN RATIONAL AND SYSTEMATIC DECISION MAKING. This is perhaps the most central point arising from the literature and the interviews. Price and the hard, tangible attributes of the physical product do not fully explain purchase decisions and the resulting market share. It may be true that "the intangible features of the brand play a less potent role in industrial purchase decisions than in the consumer sector" ([58], p. 60), but this has not been confirmed by research. Proven methodologies can be adapted to identify and measure how important the intangible attributes of industrial brands are to the choice decision. NOTICE THE NAMING STRATEGIES. There is more to a brand than its name, but naming strategies are a good place to start an analysis. Insights can be gained by examining the use of the manufacturer name in company literature and advertising for products in a particular market sector. A range of options is available for each product. The products may use the company name with simple product identification numbers or letters, or may use names that combine the company and the product

brand name, or may use product brand names, with frequent references to the company name, or may use the product brand names, with little or no mention of the company name, or some combination of these strategies. Product winners and losers differ in many ways. Type of name utilized may be one of the differences. R E L A T E THE PRESENCE AND DEGREE OF BRANDING TO T h e analysis of names can be used as a starting point for an analysis of the levels of branding (basic, augmented, or potential) present in the sector. This analysis can be developed into a profile of branding patterns. The patterns can be compared to differences in product financial performance. For example, two competing specialty chemicals may meet the same physical specification (basic brands), and offer a similar package of technical support and guarantees (augmented brands), but have very different market shares. One company's communications emphasize and detail these services, while the communications of the other company, the market leader, focus on corporate leadership themes. What a manufacturer says in an ad campaign does not necessarily change customer perception of the important differences in the offers. Talking about leadership does not create a potential brand in the customer's eyes, but it does indicate a competitor's view of itself in the marketplace, and may indeed reflect customer views. Questions such as "In which segments do basic brands perform well?", and "Does the market leader offer a product with a higher degree of branding than its competitors?" should be raised. These questions can help managers to modify their branding strategies to suit particular industry segments.

munications, and image are more difficult to achieve, but may have more lasting value. One marketing manager, who regularly measures customer satisfaction, commented, "if our performance is seen as weakening by our customers, we examine it to determine if it is a functional performance issue, or if it is a weakness in the communications message getting through."

PRODUCT FINANCIAL PERFORMANCE.

CONSIDER ALTERNATIVE WAYS TO ADD VALUE TO THE

The most direct method of adding value is to enhance the physical product, but this basic branding approach has limitations. Products can become overengineered, resulting in customers turning to those with a better sense of fit for purpose [5]. In other cases, when competitors are quick to copy enhancements, customers may simply expect continual physical product improvement, and look further for value. Augmenting the brand can take several forms. Distribution performance, in terms of required lead times, and on-time delivery, can be a critical factor, as is the availability and performance of a range of support services. The strength of a potential brand stems from equally valuable, but more intangible sources. Improvements in the overall quality of the buyer-seller relationship, comPRODUCT.

CONCLUSION This article has attempted to challenge academics and managers to place industrial branding into a broader context. Consumer branding strategies are not directly transferable to industrial markets. They need to take into account the insights gained from research in organizational buying, buyer-supplier relationships, and industrial segmentation. The pinwheel of brand value to the customer provides a way of organizing the very complex origins of added value, with tangible and intangible aspects reinforcing the four basic components of performance. The conceptual framework and the interviews perhaps raise more questions than they answer. Further research is needed to shed light on the way customers in particular industrial markets actually value different tangible and intangible attributes, and how various product and market characteristics affect these valuations. The exploratory field interviews summarized in this article provide a starting point for broader, sector specific and cross-sector qualitative and empirical research, and highlight the need to examine buyer attitudes within a segmentation analysis. Questions on how best to quantitatively measure branding phenomena remain to be answered. Practical industrial brand management issues also merit further attention. For example, guidelines on naming products obtained through acquisitions and brand extensions, and the coordination of multinational communications need further development. The potential power of industrial brands is great, but remains largely unexplained and untapped.

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